Analysis of Higher Education Funding

Published on November 17, 2023
Published by Social Administrative Program Evaluation Division

   Under the Higher Education Act, the Korean government established the Basic Plan for Higher Education Funding and has implemented higher education funding policies to nurture future talent by ensuring stable funding and encouraging autonomous innovation at universities. In light of significant shifts in the higher education environment in recent years, including the shrinking school-age population, technological advancements, and evolving industrial landscape, this report explores the current state and outcomes of higher education funding policies and suggests future directions. The key findings are as follows.
   Firstly, Korea still lags behind in higher education investment and government funding compared to the OECD average, as shown in key indicators including public education expenditure per student, and quality of higher education, measured by educational and research conditions and the global competitiveness of universities, has not significantly improved despite the continuous expansion of higher education funding through the 10-Year Basic Plan for Higher Education Investment (2010). In this regard, it is critical for Korean universities to set a strategic and mid to long-term direction for investment to meet societal needs, such as fostering talent in new technology and advanced industries and promoting balanced regional development, along with ensuring continued investment in higher education
   Secondly, while the government’s scholarship program has eased the financial burden on households with university students by expanding eligibility and the unit cost of scholarships, it is necessary to reassess the program’s financial requirements and chart its mid to long-term direction by considering diverse factors, including the declining school-age population and the need for efficient allocation of the higher education funding budget in a comprehensive manner. There are concerns about universities’ financial hardship caused by tuition regulations that have remained in place since 2012, a decrease in admission resources and subsequent degradation in the quality of university education. These concerns also need be considered for future policy directions, even though National Scholarship Type II, which is tied to tuition regulations, has succeeded in lowering average tuition fees.
   Thirdly, funding for the National University Development Project and University Innovation Project should focus on enhancing the educational and research competitiveness of universities by strengthening performance evaluations of their autonomous innovation. The National University Development Project and University Innovation Project are both general funding projects that assist universities in strengthening their capabilities through stable funding. However, decreased motivation surrounding performance management measures resulting from reduced incentives for project performance in the National University Development Project and the qualitative performance evaluation relying on simplified reports and performance indicators voluntarily provided by universities in the National University Development Project and University Innovation Project make it difficult to guarantee accountability corresponding to the enhanced autonomy regarding funding execution at universities. In this regard, it is necessary to ensure that funding performance has a moderate level of influence on incentive allocation and seek ways to strengthen the competitiveness of university education and research by promoting performance evaluations, including improving performance indicators.
   Fourthly, in reorganizing the local government-university cooperation-based Regional Innovation Strategy Project (RIS) into the Regional Innovation System & Education Project (RISE), detailed project planning is required based on a thorough analysis of RIS outcomes and their effectiveness. RIS aimed to establish platforms for local governments and universities, reorganize the educational systems in the regional core areas, and support fostering local talent to create a virtuous environmental cycle for regional development from nurturing talent to employment, start-up, and regional settlement. Starting from 2025, RIS is scheduled to be integrated into RISE along with other projects such as industry-academia cooperation, vocational and lifelong education, and local university development projects. However, as certain issues from RIS are not fully resolved yet, for instance, unclear roles among local governments, universities, and the Ministry of Education as well as the capacity limitations of local governments in supporting universities, it is crucial to establish detailed project plans based on a thorough analysis of the effectiveness and feasibility of RIS.